Saudi Pipeline Attack Sparks Gold and Silver Surge

A drone attack on Saudi Arabia's East-West pipeline has sparked a surge in gold and silver prices, with both metals rebounding sharply in early U.S. trading Thursday.

The attack, which forced the shutdown of the pipeline, threatened to put up to 4% of global oil supply at risk, or roughly four million barrels a day.

As a result, Brent crude prices spiked to a four-month high near $109 a barrel this week, pushing the 10-year Treasury yield higher and making non-yielding gold less attractive to hold. However, with Saudi Aramco now repairing the damage and aiming to restore about half of the pipeline's capacity within days, oil-driven inflation fears have cooled, and Treasury yields have dropped.

This led to a sharp rebound in gold prices, which last traded at $4,368.71 an ounce, up 2.47% on the session. Silver prices outperformed gold, climbing 3.94% to $65.45, with the gold-silver ratio dropping to roughly 66.8 ounces of silver per ounce of gold.

The Bank of England's decision to hold its benchmark rate at 3.75%, with a 6-3 vote, had little impact on the dollar-denominated gold and silver prices, but kept the wider rate-differential story intact heading into the fourth quarter.